Retirement: Net Unrealized Appreciation (NUA) and General Financial Insight

Employees who've been around a long time and contributed to their 401k may have considerable GLW stock there. At one time, the 401k match was issued in GLW stock. How that stock is rolled over and taxed can be an important consideration. I've linked one website on the subject, but there are many.

https://www.investopedia.com/investing/rolling-over-company-stock/

In my case, I had essentially transferred the value of the stock in my 401k into other funds a few years before I retired. I had no financial advisor then, and wonder if that was a wise move. I did worry about having too many eggs in one basket.

Recently I received an email from someone on the list who offered a bit of information about NUAs. Since I didn't have to deal with GLW stock at retirement, I passed the email along to two others who have mentioned NUAs to me personally in the past. The result so far is the following notes. I don't think they provide too deep a dive into NUAs, but they do provide some insight into what fellow retirees are doing with their nest eggs.

Mark,

I don't know if you know about NUA's (Net Unrealized Appreciation) of company stock held in your 401k. Possibly others on your blog also may not know about NUA's either.

I have not yet done anything with my 401K and my the Corning stock held in my 401k. I have not made my final decision but I believe I will move out the Corning 401k early next year.

There are two more advantages in doing a NUA move to a brokerage account addition the tax advantages.

1. The value of the stock moved to the brokerage account is no longer in your 401k or new IRA account and is not subject to annual RMD disbursement.
2. If the stock is never sold. Your heirs will inherit the stock at the valuation of when it was moved to the brokerage account and only have to pay capital gains on the growth after the transfer.

Hi All -

I had a lot of Corning stock in my 401k when I retired two years ago, and my financial advisor suggested that I move all of it to a brokerage account under the NUA rule. This was a pretty complicated task, as Empower was not happy to assist us in this. I finally had to get my advisor on the phone with me and Empower, and he had to practically shame them into giving us the 14-page form to make the move. It then took 3 weeks to show up in the Commonwealth account (my 401k balance showed $0 and my commonwealth account showed $0 for this stock for 3 weeks!).

My advisor then advised me to sell some of the stock, since it represented a large portion of the overall portfolio value, so I sold ~1500 shares this year. We then went on a mission to find the basis for each stock purchase transaction (mind you, the purchases went back to 1987); neither Corning, Empower, nor Computershare could give me anything other than an average basis for the entire lot. Fortunately, I was a hoarder of 401k statements for 38 years, and for some reason I kept them after cleaning out my office. We were able to reconstruct the purchases and determine the individual purchase basis fairly well in a spreadsheet.

This week I had my advisor set up a donor-advised fund for future charitable contributions, and we moved some Corning stock into that. I will get a tax deduction for the entire move this year but can dole it out over multiple years going forward. Since the basis of this stock was fairly low compared to today's value, it made sense to use the stock for this account. Trump's Big Beautiful Bill reduces the tax savings on this beginning next year by 5%, so I wanted to get it done before year-end. I cannot stress how glad I am to have my financial advisor helping me with all of this!

Thanks for the detailed reply.

My story.

My wife and I have not had a financial advisor for a few years. The last guy was a 60/40 stock to bonds guy. I am not much in to bonds and so after 3 years of his advise we moved on.

My wife's IRA is held in a Fidelity account. Fidelity system is very easy to use and access to a lot of information. Over the last few years an in house Fidelity financial advisor has reached out to her on an annual bases see if he could offer some advice. We now have met with the Fidelity guy via Zoom twice and we like him. He has completed a basic review of our portfolio, income, and etc. Based on our income and other moves I made earlier this year he recommends we do nothing more this year. He recommends that we take a deeper review early in 2026.

He also strongly recommends that any move sends the Corning Stock directly to a brokerage account via the NUA process. I do not have any historical cost bases information that I can help him with. I throw-out all my taxes and financial documents after 7 years. I will have use the average cost bases number that shown in my Corning 401k account.

I have never been a fan of the Empower Team but as you know you have to go through Empower to access your 401k.

Another retiree moved out of the Corning 401k a couple years ago and he did the NUA deal. He also is not an Empower fan but he completed all the moves to Empower Accounts and then a short time later he moved everything to a Fidelity account. He has a financial advisor that does not directly work for Fidelity.

I am 99% sure I will be moving out of the Corning 401k next year and may choose what he did and have Empower accounts created and then move to Fidelity after a short while. I will ask my new Fidelity guy on best way to do this.

The Fidelity guy that we are going to work with is paid directly by Fidelity not through a 1% to 2% advisor fee. He has a base pay package directly from Fidelity with others factors that include account retention, customer satisfaction, new accounts created, etc.